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Real Estate Trust Listing Rules Eased to Boost Investment

  • On the Union Budget 2014 day, the Indian government announced the listing of real estate investment trusts (REITs) in the stock markets to encourage more of foreign investment in property sector.
  • The decision is a part of the steps taken by the Government to revive the realty sector, which in the past has seen a major downfall due to slow growth in economy.
  • The first attempt to issue REITs was made in 2008 but was kept on hold due to global financial crisis which were affecting the interest of investors and the negative growth in economy made it difficult for the real estate sector to grow.
  • The entities listed by the government for REIT mainly include leased offices and retail assets.
  • Finance Minister Arun Jaitely, has also mentioned to grant necessary incentives for REITs that will have pass through for the purpose of taxation. This current proposal would facilitate a single layer of tax although requires more changes and better clarity from government on corporate tax as earlier it triggered worries on double tax.
  • The measure will definitely help government to win trust of foreign investors and shareholders will benefits with distribution of incomes as their dividends.
  • REITs will help companies to generate revenues by selling the finished commercial products to investors and listing them in the stock market wherein the investment can be from a foreign player or a domestic investor including non residential Indians.
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